This study evaluated the effect of external debt stock on the economic growth of South Sudan for the period 2013–2018. A case study research design was adopted, employing both quantitative and qualitative approaches. Data were collected from 60 respondents drawn from government departments, financial institutions, and academia using structured questionnaires and interview guides. Descriptive statistics were used to analyze the data using SPSS. The findings revealed that 63.3% of respondents acknowledged that South Sudan carries external debts exceeding US$1.4 billion, while 71.6% confirmed the country has very low foreign exchange reserves. Furthermore, 81.6% of respondents agreed that South Sudan faces external payment difficulties attributable to its growing debt stock. The study also found that the bulk of externally borrowed funds (83.3%) was channeled to defense rather than productive sectors such as agriculture (41.7%), health (35%), and education (30%). Regarding determinants of economic growth, respondents identified human capital (88.3%), government policies (83.3%), inflation management (78.3%), sustainable fiscal policy (75%), and physical capital (71.7%) as the most important factors. The study concludes that an unsustainable external debt stock has adversely affected South Sudan’s economic growth by constraining foreign reserves, limiting access to long-term financing, and diverting resources from productive investment. The study recommends that the government establish an optimal balance between external and domestic debt, stabilize the exchange rate, redirect borrowed funds toward growth-enhancing sectors, and adopt prudential fiscal management measures.
Keywords: External Debt Stock, Economic Growth, Debt Overhang, Fragile State, South Sudan
Citation: Ayuel Bill, D. B. (2026). External Debt Dynamics and Economic Growth in a Fragile State: The Case of South Sudan. J Business & Eco Insights.,2(3):1-10. DOI : https://doi.org/10.47485/3143-5807.1030